Honda (本田汽车) warns of big losses, to book up to ¥2.5 trillion in EV write‑downs; executives to take temporary pay cuts

Big provision and a sharp earnings downgrade

Honda (本田汽车) warned investors it will re‑evaluate its electric‑vehicle (EV) strategy and expects to book up to ¥2.5 trillion (about $15.7 billion) of related charges and impairments over the coming years. The company said this reassessment has flipped its fiscal 2025 outlook (year ending March 2026) from a projected net profit of roughly ¥300 billion to a likely net loss in the range of ¥420–690 billion. Revenue guidance is being held at about ¥21.1 trillion despite the profit hit.

Why the change — and what it means

Honda said the charges stem mainly from slowing EV demand in North America and a decision to cancel parts of its planned pure‑EV development programme, with related assets to be written down. It has been reported that the company will also take impairments on some China investments as local new‑energy vehicle (NEV) competition intensifies. Why the pause? Market demand, subsidy shifts and charging infrastructure have left automakers rethinking timing and technology choices — electrification is still policy‑driven in many countries, but commercial realities are forcing a more selective approach.

Trade, tariffs and broader industry context

Geopolitics and trade policy are relevant too: Honda signalled earlier quarter losses tied to U.S. tariffs as well as EV‑related impairments. Honda’s move follows similar recalibrations across the industry — for example, it follows Stellantis (斯特兰蒂斯) booking roughly $26 billion, Ford disclosing about $19.5 billion, and General Motors around $6 billion in EV‑related charges in recent months — underscoring that the global EV transition has entered a more uncertain, capital‑intensive phase.

Short‑term belt tightening and next steps

To shore up credibility with investors, CEO Toshihiro Mibe (三部敏宏) will forgo 30% of his monthly pay for three months, and other senior executives will accept proportional reductions. Honda says it will lean harder on hybrid technology, its profitable motorcycle division and financial services to stabilise earnings, and will publish an updated medium‑to‑long‑term strategy next fiscal year to clarify its balance between hybrids and full EVs. Is this a strategic pause or a permanent course change? The coming strategic update will tell.